Who Says You Can’t Buy Credibility?

Unfortunately, customer reviews might not be as reliable as once thought. There is mounting evidence that a substantial portion of customer reviews are not real, and instead are created by someone with an undisclosed relationship to the seller or the product.

Stopping Fraud from Ruining Customer Reviews for Everyone 

 

December 2012 

By Jacob Parks, J.D., CFE 

 

We expect advertising to be biased. The product’s strengths and appeal are promoted and perhaps compared to the weaknesses of competitors. Customer reviews, by contrast, are designed to be a tool for prospective purchasers to get a more objective opinion on whether a product or service is worth what the seller says it is. One common feature that has made premier online stores like Amazon and eBay so successful is how they promote customer reviews for items and sellers. The increasing convenience of obtaining customer reviews for almost any product or service — from dining room sets to legal services — has made such reviews one of the most important devices in marketing.

 

The end result should be that we, as consumers, are making purchases of products that have proven effective, as opposed to those that have merely been advertised effectively.

 

What Is Actually Happening 

Unfortunately, customer reviews might not be as reliable as once thought. There is mounting evidence that a substantial portion of customer reviews are not real, and instead are created by someone with an undisclosed relationship to the seller or the product. More and more companies that offer or display customer/product reviews are finding that fake reviews are endemic on their online systems. According to a New York Times article (“The Best Book Reviews Money Can Buy” by David Streitfeld), Bing Liu, a data-mining expert at the University of Illinois, Chicago, estimated that around one-third of all customer reviews on the Internet are fake. When considering that many customer reviews are aggregated to summarize a product or seller (e.g., “9 out of 10 stars based on 140 reviews”), a one-third margin of phony fluff largely defeats the purpose.

 

The most common deceptive strategy of this type is simple: make fake positive reviews of your product to convince real buyers to purchase it. The fake reviews might be created by the seller, a third party the seller hires to create them, or someone else with an ulterior motive in a particular market. 

It is not just fake positive reviews that are out there, either. Phony negative reviews can be even more harmful to the reliability of evaluating products through customer reviews.

 

“My steak was overcooked.”

 

“The customer support staff was not helpful at all.”

 

“The signal reception was horrible.”

 

These are the types of worries that scare off customers who might have otherwise bought a product. If this tactic sounds unrealistic, consider a recent study that found that large chain hotels located near independent hotels were more likely to have negative reviews than their sister chain hotels that were isolated from independent hotels. The study, “Promotional Reviews: An Empirical Investigation of Online Review Manipulation,” concluded that the independent hotels had a higher incentive to create fake reviews, as well as a higher manipulation rate involving negative reviews.

So who is harmed in this process? Just about everyone involved in the particular market, including:

 

The consumer: Fake reviews are a type of false advertising directed at consumers. They purport to be — explicitly or implicitly — objective evaluations from “real” customers. Consumers make purchasing decisions based on this misleading information.

Competitors: Organizations that are not willing to play the game and create fake customer reviews for themselves are at disadvantage to the organizations that do. Customer reviews should reward quality products and services. When the objectivity of the reviews is undermined, that benefit is much less pronounced.

Targeted organizations: Sellers and other organizations that get reviewed also have to worry about competitors or other parties with malicious motives creating fake reviews.

Reviewer networks: Online stores like Amazon and networks of reviewers like Yelp and Facebook have their credibility questioned when it is well known that fake accounts and reviews are common.

 

Is It Fraud? 

Beyond alarming each of us as consumers, if these deceptive marketing practices merit the label of fraudulent, then the issue is also in the purview of fraud examiners. Faked customer reviews meet all of the elements of the general definition of fraud. The perpetrators are using deception to obtain an improper financial advantage over another person or organization. However, whether someone who creates fake reviews is breaking the law is a bit of a gray area. Sometimes, a violation of the law is fairly clear, such as when someone posts a false negative review about a competitor. Such an act would at least violate traditional defamation laws, not to mention fair marketing rules.

 

The Federal Trade Commission (FTC) regulates marketing practices. The FTC requires that “when there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience), such connection must be fully disclosed.” If the person making the review is the seller, then it is safe to say there is a connection that would materially affect the endorsement’s credibility. Similarly, paying a third party to write a review amounts to advertising and is a material connection that should be disclosed.

 

While the FTC has brought various enforcement actions against organizations that create fake reviews in high volumes, the practice is alive and well. Additionally, sometimes the specific harmed parties and the extent of the damages are difficult to identify or estimate. Many products, such as books, can benefit from fake endorsements, but might not be in direct competition with any particular person or product. The purchase of one book usually does little to prevent the purchase of any other particular book by the same customer. Which party would have a claim against the fake endorser: Every author in the genre? Every author in general? Even if a party had standing to bring a claim, how would it prove the amount of damages?

 

In short, fake reviews are both harmful and legally difficult to pursue. The best remaining option is prevention.

 

Prevention 

As consumers, we might acknowledge the likelihood that some reviews are bogus and some are not, but the people behind fake customer reviews have learned some tricks. They realize that filling out a dozen reviews with vivid endorsements that sound too good to be true (or perhaps protests that sound too bitter to be true) probably are. They might, for example, give a glowing account of how good a product is, and then point out some minor flaw that will not cause most people to walk away from the purchase (e.g., “The book was fantastic, but the cover art did not offer anything new”). Objectivity or biases are not always going to be obvious.

 

So how can consumers tell a fake review from a legitimate one? Much of the time, they simply will not be able to. 

 

The best chance of preventing fake endorsements or negative reviews from causing harm is for organizations that host reviews or whose products are reviewed to be proactive. Multiple efforts are underway to improve detection and prevention of fake reviews and accounts. For instance, researchers from Cornell University proposed several automated processes that use algorithms to examine customer reviews and indicate which ones are likely fake or deceptive (“Finding Deceptive Opinion Spam by Any Stretch of the Imagination,” June 19, 2011). Part of the study involved mixing 400 positive but fake hotel reviews created by freelance writers, and then mixing those with 400 positive reviews taken from the hotel review website TripAdvisor. Human judges in the study were unable to tell the known fakes from the reviews posted to TripAdvisor. However, the methods used by the researchers were more successful in accurately identifying the fakes — nearly 90 percent of the time.

 

The automated processes in the study weigh a wide range of factors against each other to pinpoint fake reviews. For example, the processes took into account that deceptive reviewers tend to:

 

Have difficulty filling in spatial information (e.g., the room layout or the size of the hotel bathroom). 

Focus on details external to the hotel reviewed (e.g., who they went with on the trip or the purpose of the trip).

Make more frequent use of exclamation points.

Use first person singular more often like “I” and “me.”

Display traditional signs of imaginative writing as opposed to informational writing, meaning less use of nouns, adjectives (with the exception of superlatives like “best ever” or “comfiest”), and prepositions, and more use of verbs, adverbs, and pronouns.

 

It would be very difficult for an individual reading a review to take each of these factors into account, assign them a proper weight, and accurately predict a review’s accuracy. With automated processes like the ones in this study, however, reasonably distinguishing the real and the fake is possible.

 

Methods like those used by the researchers above are quickly entering the market in the form of software and consulting companies that can help organizations with customer-review issues to identify and prevent the fraudulent ones. Likewise, major product-review sites are developing in-house tools to detect fake reviews. Depending on your organization’s size and the nature of the reviews, you might want to check on available products to see if one would help protect your organization’s reputation.

 

Additionally, consider the following prevention techniques:

 

Conduct due diligence on any third parties that provide marketing services for your organization. Make sure they do not violate the law on their clients’ behalf by creating fake reviews.

Look for red flags of fake reviews, such as uneven “clumps” of reviews around the same time period, anonymous reviewers, consistently positive or negative reviews from the same person or account on many of the seller’s products, reviews without diversity of style, and extremely emotive language.

Assign someone to periodically examine negative reviews about your organization and products. Following up with the individuals who post such reviews is beneficial from a customer-service standpoint, as well as for awareness of fraudulent reviewers.

If your organization posts reviews of its own products or hosts them for other products, consider requiring proof of purchase for a review to be made (e.g., entering a transaction number). This might make leaving a review slightly more burdensome for legitimate customers and reduce the total volume of reviews left, but it will also block many fake reviews.

For reviewer networks, include terms in the user agreement that prohibit customer reviews by the seller or someone with a material, undisclosed relationship with the seller. Have penalties for violations of these terms, such as user account deletion.

 

Conclusion 

Fake customer reviews and other endorsements are bad for consumers and honest businesses alike. Individuals or organizations that engage in these marketing tactics are, at best, in an ethical and legal gray area, and are oftentimes committing flagrant violations of the law. While it is good to see that increased attempts by the FTC and other law enforcement agencies to shut down these schemes, organizations involved in customer and product reviews should be vigilant by looking into additional prevention measures.